Ask yourself this checklist of questions
Buying a home is a huge decision. It’s usually the biggest investment most people make in their lives. And there are so many things to consider. As you’re considering your options, we put together a list checklist of questions to ask yourself before buying a home.
What is the current real estate market like?
If you live in Colorado, then you’re probably aware that it’s a seller’s market. What does that mean? For Buyers, it means if you find a place that you like, you need to act fast because the average house is only on the market for a few days! If you’re a Seller your home is likely to sell quickly, so you need to have a plan for where and when you’ll move. Recently we have worked with our sellers to get a Post Closing Occupancy Agreement with the Buyers to allow the sellers to stay in the home for 30-60 days after closing. A PCOA allows the seller to sell their home first, buy their new home, and only have to move once. BTW, if you’re a Buyer, allowing the Seller to stay in their home after closing can be a powerful negotiating advantage. Give us a call for more information and ideas about a PCOA.
What will my monthly payment be? What will it include?
The amount of your monthly mortgage payment will depend on multiple things:
- The amount of your loan
- The interest rate
- Property taxes
- Insurance
You may have heard the term PITI. Principal, Interest, Taxes, and Insurance. Virtually all buyers who get a mortgage will make a monthly PITI payment to their lender. The monthly Taxes and Insurance amount will be 1/12 of the yearly total. The lender escrows those funds, and the lender pays the tax bill and insurance bill from the escrowed funds.
Will my homeowner’s insurance increase? If so, by how much?
If you currently rent, there will obviously be a difference between renter’s insurance and Homeowner’s insurance. If you currently own a condo and you’re looking to buy a single-family home, there’s likely going to be an increase in your homeowner’s insurance. It’s best to know what the difference will be ahead of time, or at least get an estimate, so you can calculate that into your new budget.
How much will utilities cost?
Your monthly utility bills are likely to change if you’re going from renting to buying or if you’re increasing your home type. Things such as water and garbage might currently be included in your rent or homeowner’s association, but will be your responsibility with the new home.
Will my commute be better or worse?
You definitely want to take a look at your new route to work to get a sense for how your commute will be affected. Additionally, if your commute is longer, you’ll want to factor in the additional cost of gas. This may not be a huge deal, but everything will add up.
Does the school system meet our requirements?
If you have children then you definitely want to check into the local public schools or what private school options you have. Don’t have kids yet? This is still something you should take a look at as it will affect the resale opportunity.
What maintenance will my home require (in the next 5 years)?
This is a big one. Yes, it’s typical to have an inspection prior to buying a home and you’ll be aware of anything the inspector points out. But what about the stuff the inspector can’t see? There are all sorts of things that happen with a house that you should be prepared for. If you’re buying in a mature neighborhood with big trees on the lot, consider how old the house is and ask if the sewer line has been replaced, and if so, how long ago. We strongly advise getting a sewer inspection before purchasing a home. Other big ticket items are windows, roofs, water heaters, furnace and air conditioner.
It’s both exciting and challenging buying a new home! We hope now you feel better prepared for buying a new home. We’d love to answer any questions you may have and partner with you on this exciting process!